C.P. Ispat Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.14.85 Crs. of C.P. Ispat Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned	14.50	Long Term	BWR D
Sub Total	14.50
Non-Fund Based
Bank Guarantee - Sanctioned	00.35	Short Term	BWR D
Sub Total	00.35
Grand Total	14.85	(Rupees Fourteen Crores and Eighty Five lakhs Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK :

BWR has taken a Standalone view of  C P Ispat Private Limited and essentially relied upon the audited financial results up to FY 19 and publicly available information and information / clarifications provided by the entity’s management. 

The rating assignment is based on the ongoing delays in servicing of debt obligations, stretched liquidity profile  and low profitability of the company . The rating also factors extensive experience of the promoters in the steel industry and healthy revenue growth.

KEY RATING DRIVERS

Credit Strengths:

• Experienced Management :

  The Directors of the company have been engaged in the manufacturing of sponge Iron in the steel industry which enables them to establish relationships with its customers and suppliers.

• Healthy Revenue growth :

  The revenue of the company has shown a continuous improvement since the last three fiscals. The revenue has increased by 7.97% in FY 19 and a CAGR of 84.77% in the last two years.

Credit Risks:

• Weak liquidity position :

  The company's stressed liquidity position is marked by an elongated working capital cycle.

• Continuous delay in servicing debt obligation :

  There has been continuous over drawings in cash credit facilities for the last six months.

• Working capital intensive nature of operations :

  The company’s operations are expected to remain working capital intensive as high inventory is being maintained.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward, ability of the company to service its debt obligations in a timely manner, to further increase its sales, to improve its profitability and to improve its liquidity position would remain the key rating sensitivities.

Positive: Timely repayment of debt obligations, improvement in liquidity position and overall financial risk profile of the company.

LIQUIDITY POSITION

The company's liquidity position is poor as reflected in delay in servicing of its debt obligations, continuous over utilization in the cash credit facility. The same has also been marked by an elongated cash conversion cycle of 151 days and low current ratio which stood at 0.99 times in FY 19.

PROFILE

C P Ispat Private Limited is a private limited company incorporated in 2006 and the commercial operations started in July 2009. CPIPL was promoted by the Kolkata-based Chawla family and the company was earlier managed by Mr. Amarjeet Chawla. However, in September 2013, the Chawla family leased out the plant to the Durgapur-based Jayshree group owned by Mr. Amit Agarwal and his family and since September 15, 2013, the operations of the plant have been managed by the Jayshree group. In February 2014, the Jayshree group entered into an agreement with the Chawla family to purchase CPIPL with effect from April 2014. It engaged in manufacturing sponge iron with an installed capacity of 20 MT per day. Its manufacturing facility is located in Durgapur, West Bengal.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19 (Audited)	FY 17-18 (Audited)
Operating Revenue	Rs.Crs.	85.66	79.34
EBITDA	Rs.Crs.	3.68	3.59
PAT	Rs.Crs.	0.08	0.46
Tangible Net Worth	Rs.Crs.	46.37	46.30
Total Debt/Tangible Net Worth	Times	1.08	0.50
Current Ratio	Times	0.99	1.41

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2020)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2019	2018	2017
Fund Based
1	Cash Credit - Sanctioned	Long Term	14.50	BWR D	NA	NA	NA
Non-Fund Based
2	Bank Guarantee - Sanctioned	Short Term	00.35	BWR D	NA	NA	NA
Total			14.85	(Rupees Fourteen Crores and Eighty Five lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

For More Information Contact:

Analytical Contacts	Investor Contacts
Saroj K Das Ratings Analyst D : +91 90739 18940 sarojkumar.d@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
K.Venkateswara Raju Associate Director - SME & Vendor Gradings B : +91 80 4040 9940 kvraju@brickworkratings.com
1-860-425-2742

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Bank Guarantee - Sanctioned	_	0.35	0.35
2	Cash Credit - Sanctioned	14.50	_	14.50
Total				14.85
TOTAL (Rupees Fourteen Crores and Eighty Five lakhs Only)